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What a time to call Seattle home. Our city continues to be named one of the most desirable cities in the United States. From the numerous cranes popping up in South Lake Union to being recognized as an affluent power player in the tech industry, it’s no doubt we find ourselves living in an important era in Seattle’s economic expansion. Queen Anne hill finds itself poised among the hustle and bustle of our city. If you live on Queen Anne you are already aware that its location, great schools, parks, and charming homes are among the many reasons it is one of the most popular neighborhood in this area.

One way this can be measured is to examine statistics. Here I have compiled statistics regarding for sale and sold listings on Queen Anne (area codes 98109 and 98119) from 2014 and 2015. I chose to break this information down by price point to examine the changes in demand by price. These statistics only include residential, single family homes that are resales.

The findings are pretty incredible. For example, the number of sold properties in the price range of $1 million to $1.25 million rose 118% in 2015. When looking at properties in the price point of $350,000 to $500,000, there was a 69% drop in the number of listings and a 61% drop in the number of sold properties.

If you have any questions about these statistics, real estate needs, or what this means for your home please don’t hesitate to contact me at renes@windermere.com.

Seattle is back on the list of the top five U.S. cities for foreign commercial real estate investment, according to a new survey.

This means that domestic investors will face stiffer competition buying properties in the Puget Sound region. Survey respondents said they’re most interested in buying apartment buildings and industrial properties.

The Association of Foreign Investors in Real Estate (AFIRE) on Monday released its 24th annual survey of members, and Seattle tied with Boston for fifth place. It’s only the second time Seattle has made the top five, and the first time since 2006. Seattle ranked eighth last year.

Washington, D.C.-based AFIRE has nearly 200 members representing 21 countries. The group says its members are among the largest international institutional real estate investors in the world with an estimated $2 trillion or more in real estate assets under management globally.

A Union Investment executive, Martin Bruhl, said Seattle is an attractive place to invest because it’s one of the nation’s fastest-growing cities and attractive to young, well-educated people.

James A. Fetgatter, chief of Washington, D.C.-based AFIRE said it’s the United States itself that is the investment opportunity. The real estate fundamentals are sound, and the economy continues to remain strong, both in gateway and secondary cities, he said.

Sixty percent of survey respondents said the U.S. was the country providing the most stable and secure real estate investments. Germany, which came in second, had only 19 percent of the vote in this category.

In addition, 46 percent of respondents said the U.S. was the country with the best opportunity for capital appreciation.

Respondents said that in the U.S., multifamily and industrial properties tied for first place as the preferred investment type. Retail was third, office fourth and hotels fifth.

Globally, New York City and London were ranked No. 1 and 2, respectively, in the survey. They were followed by Los Angeles, Berlin and San Francisco.

In the U.S., New York, Los Angeles, San Francisco and Washington, D.C., ranked respectively ahead of Seattle and Boston.

The James A. Graaskamp Center for Real Estate at the Wisconsin School of Business conducted the survey during the fourth quarter.

The National Economic Forecast

1.The U.S. will continue to expand with real GDP growth of 2.3% in 2016.

Although a positive number, the forecasted rate of growth suggests that we will be modestly underperforming in 2016. On a positive note, oil prices are likely to remain well below long-term averages, which puts more money into consumers’ pockets in terms of disposable incomes. However, I believe that consumers are likely to continue to save rather than spend which will constrain growth. That said, there is certainly no recession on the horizon – at least not yet – and a strong dollar will act as a bit of an anchor.

2.Employment will continue to expand but the rate of growth will slow. Look for an increase of 1.6% in 2016.

We are rapidly approaching full employment (generally considered to be when the unemployment rate drops below 5 percent). As such, growth in employment has to be driven more by population growth rather than a return to employment. 2015 saw an average of around 210,000 jobs created per month and I believe that this is likely to slow to an average monthly gain of 190,000 new jobs.

3.The U.S. unemployment rate will continue to drop and end 2016 at 4.8%.

As mentioned above, we are heading toward full employment and, as such, the national unemployment rate cannot trend much lower. That said, the less acknowledged U-6 rate (which includes those working part-time and those marginally attached to the workforce) will remain elevated at around 8%, signifying that there is still some slack in the economy and room for the rate to drop a little further.

4.Inflation will remain in check with the Consumer Price Index at 1.9%.

The Federal Reserve has begun the long-awaited tightening of monetary policy and we will likely see the Fed Funds Rate continue to move higher over the next two years. Inflation has yet to respond to the low unemployment rate, but it will.

The core rate of inflation should remain in check and the overall rate could stay below long-term averages as a function of stubbornly low energy costs. Should we see a shift in OPEC’s position relative to oil supply, the overall rate of inflation could rise more rapidly. Oil prices, therefore, will remain in focus during 2016.

The National Housing Market Forecast

5.Mortgage rates will rise, but we will still end 2016 with the average 30-year fixed rate below 5%.

I am taking the Fed at its word when it says that monetary tightening in 2016 will be gradual and heavily data dependent. Accordingly, I expect only a modest uptick in long-term rates in 2016. Furthermore, as long as the Federal Reserve continues to reinvest the dividends that it is receiving from their bond holdings – which is highly likely – the yield on the key 10-year treasury will remain low and hold mortgage rates in check. This is only likely to change after the general election, therefore suggesting that rates will remain very attractive relative to their long-term averages.

6.Credit Quality – which had been remarkably stringent – will relax a little.

Access to credit, specifically mortgage instruments, has not been easy for many would-be homebuyers but that is set to change. I believe that we will see some improvement, specifically for borrowers with “near-prime” credit. This will be of some assistance to first-time buyers; however, credit quality will still be higher than it needs to be.

7.Existing home sales will rise modestly to an annual rate of 5.53 million units with existing home prices up by 4.7%.

I anticipate that we will see some improvement in overall transactional velocities in 2016, but unfortunately, demand will still exceed supply. Prices will continue to rise, but at a more constrained pace than seen over the past few years. This will be a function of modestly rising interest rates as well as slightly improving levels of inventory. I anticipate that we will see more listings come online as more households return to positions of positive equity in their homes.

8.New home sales will jump and be one of the biggest stories for 2016. Look for a 23% increase in sales and prices rising by 3.4%.

I believe that builders will start to build to the entry-level buyer, filling a huge void. Additionally, I see the total number of new home starts increase quite dramatically in 2016 as banks start to ease lending and builders start to believe that the downward trend in homeownership has come to an end. This will help to absorb some of the pent-up demand currently in the market.

9.Foreclosures will continue to trend down to “pre-bubble” averages.

Any story regarding foreclosures will be a non-story as the rate will continue to trend down toward historic averages. However, we will see the occasional uptick as banks work their way through their existing inventory of foreclosed homes. Move along. There’s nothing to see here.

10.The Millennials will start to enter the market.

There are several substantial reasons to expect an increase in Millennial buyers. Firstly, early Millennials are getting older and starting to settle down, and even with modestly higher mortgage rates, rents are likely to continue to trend upward, and this will pull many into homeownership.

Secondly, more favorable mortgage insurance premiums, additional supply from downsizing boomers, and growing confidence in the housing market will lead to palpable growth in demand from this important – and substantial – demographic.

To conclude, it appears to me that 2016 will be a year of few surprises – at least until the general election! Because it is an election year, I do not expect to see any significant governmental moves that would have major impacts on the U.S. economy or the housing market.

A survey by The Joint Center of Housing Studies at Harvard University reveals that when a family is buying a home they consider the financial benefits of homeownership along with the social benefits. The survey mentions things like:

Paying rent does not make sense

Homeownership provides a good financial opportunity

Owning a home helps you building family wealth

Buying a home is investing in your retirement

Home equity gives you something to borrow against

So how did homeownership match up against other investments in 2015? Here is a chart that compares its return on investment against precious metals and the stock market last year:

Bottom Line

Not only did homeownership offer all its social benefits. It also was a great investment financially.

Today, many real estate conversations center on housing prices and where they may be headed. That is why I am a fan of the Home Price Expectation Survey.

Every quarter, Pulsenomics surveys a nationwide panel of over one hundred economists, real estate experts and investment & market strategists about where they believe prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.

The results of their latest survey:

Home values will appreciate by 3.9% by the end of 2015, 3.4% in 2016 and 3.1% in each of the following four years (as shown below). That means the average annual appreciation will be 3.2% over the next 5 years.

The prediction for cumulative appreciation rose from 18.1% to 21.6% by 2020. Even the experts making up the most bearish quartile of the survey still are projecting a cumulative appreciation of 13.8%.

Bottom Line

Individual opinions make headlines. We believe the survey is a fairer depiction of future values.

Last week, an article in the Washington Post discussed a new ‘threat’ home buyers will soon be facing: higher mortgage rates. The article revealed:

“The Mortgage Bankers Association expects that rates on 30-year loans could reach 4.8 percent by the end of next year, topping 5 percent in 2017. Rates haven’t been that high since the recession.”

How can this impact the housing market?

The article reported that recent analysis from Realtor.com found that –

“…as many as 7% of people who applied for a mortgage during the first half of the year would have had trouble qualifying if rates rose by half a percentage point.”

This doesn’t necessarily mean that those buyers negatively impacted by a rate increase would not purchase a home. However, it would mean that they would either need to come up with substantially more cash for a down payment or settle for a lesser priced home.

Below is a table showing how a jump in mortgage interest rates would impact the purchasing power of a prospective buyer on a $300,000 home.

Bottom Line

If you are considering a home purchase (either as a first time buyer or move-up buyer), purchasing sooner rather than later may make more sense from a pure financial outlook.

Every homeowner wants to make sure they maximize the financial reward when selling their home. But, how do you guarantee that you receive maximum value for your house? Here are two keys to insuring you get the highest price possible.

1. Price it a LITTLE LOW

This may seem counter intuitive. However, let’s look at this concept for a moment. Many homeowners think that pricing their home a little OVER market value will leave them room for negotiation. In reality, this just dramatically lessens the demand for your house. (see the chart below). Instead of the seller trying to ‘win’ the negotiation with one buyer, they should price it so demand for the home is maximized. In that way, the seller will not be fighting with a buyer over the price but instead will have multiple buyers fighting with each other over the house. A recent article on realtor.com, they gave this advice:

“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly under priced, especially in areas with low inventory.”

2. Use a Real Estate Professional

This too may seem counter intuitive. The seller may think they would net more money if they didn’t have to pay a real estate commission. However, studies have shown that typically homes sell for more money when handled by a real estate professional. Recent research posted by the Economists’ Outlook Blog revealed:

“The median selling price for all FSBO (for sale by owner) homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number sinks to the median selling price of $151,900. However, homes that were sold with the assistance of an agent had a median selling price of $249,000 – nearly $40,000 more for the typical home sale.”

Bottom Line

Price it at or slightly below the current market value and hire a professional. That will guarantee you maximize the price you get for your house.

**Taken from the KCM blog (Keeping Current Matters)

The following analysis of the Western Washington real estate market is provided by Windermere Real Estate Chief Economist Matthew Gardner. I hope that this information may assist you with making better-informed real estate decisions. For further information about the housing market in our area, please don’t hesitate to contact me.

ECONOMIC OVERVIEW

After a period of above-average growth, Washington State has seen a modest slowing in employment growth, but we continue to add jobs at a respectable rate. The State unemployment rate was measured at 5.3%, marginally above the national level, but it is trending in the right direction.

Although growth continues to be uneven across the state, there are some encouraging signs which suggest that all of our main metropolitan areas should see positive job growth for the foreseeable future.

HOME SALES ACTIVITY

There were 22,207 home sales during the third quarter of 2015, up by 14.1% from the same period in 2014.

For the first time in several years, there were no counties that saw annual decreases in home sales.

The growth in sales was most pronounced in Kittitas County, and all but two counties saw double-digit percentage increases from the same period last year.

The lack of available inventory in the region continues to be a concern. Listings in the third quarter were down by 18% from the second quarter, and down by 24.5% from the third quarter of 2014.

HOME PRICES

Prices in the region rose by an average of 6.3% on a year-over-year basis and were 9.6% higher than seen in the second quarter of 2015.

The only county where home prices fell on an annualized basis was in Kittitas County, but the drop was a minuscule 0.5%. Kittitas County saw sale prices grow by 5.8% between the second and third quarters of this year.

When compared to the third quarter of 2014, San Juan County showed the fastest price growth with an increase of 14.6%. Double-digit percentage gains were also seen in four other counties.

As long as inventory constraints persist, it is likely that price growth will continue. However, if interest rates rise in 2016, as they’re expected to do, we will likely see price growth slow.

DAYS ON MARKET

The average number of days it took to sell a home dropped by nine days when compared to the third quarter of 2014.

It took an average of 74 days to sell a home in the third quarter of this year—down from 84 in the second quarter.

There were just two markets where the length of time it took to sell a home did rise, but the increases were minimal. Jefferson County saw an increase of eight days while Mason County rose by two days.

King County remains the only market where it takes less than a month to sell a home.

CONCLUSIONS:

This speedometer reflects the state of the region’s housing market using housing inventory, price gains, sales velocities, interest rates, and larger economics factors. For the third quarter of 2015 I have moved the needle a little farther in favor of sellers. Although sales did slow between the second and third quarters, I attribute this to a lack of inventory rather than any other factors. Additionally, interest rates dropped between the second and third quarters, which made buying more favorable.

The persistently low levels of inventory in the region remain a concern. Such an imbalance between supply and demand is unsustainable. When I look at the ratio between listings and pending sales there are some counties with less than two months of inventory, which is troublesome. Any number below four months is certainly considered to be a seller’s market and, in my experience, a prolonged period of time with less than six months of inventory results in an unstable market.

In normal housing market cycles, when such an imbalance exists we could expect home builders to fill in the gap with inventory, but this has not happened thus far. Unless we see a rapid escalation in construction activity, the market will remain remarkably tight well into 2016.

ABOUT MATTHEW GARDNER

Matthew Gardner is the Chief Economist for Windermere Real Estate, specializing in residential market analysis, commercial/industrial market analysis, financial analysis, and land use and regional economics. He is the former Principal of Gardner Economics, and has over 25 years of professional experience both in the U.S. and U.K.

As the temperature continues to rise, buyers are coming out ready to purchase their dream home. Here are five reasons that you should list your house for sale now.

1. Strong Buyer Demand

Foot traffic refers to the number of people out actually physically looking at homes right now. The latest foot traffic numbers show that there are significantly more prospective purchasers currently looking at homes than at any point in the last two years! These buyers are ready, willing and able to purchase… and are in the market right now! Take advantage of the buyer activity currently in the market.

2. There Is Less Competition Now

The National Association of Realtors reported last week that housing supply as slipped to a 5.0-month supply. This is still under the 6-month supply that is needed for a normal housing market. This means, in most areas, there are not enough homes for sale to satisfy the number of buyers in that market. This is good news for home prices. There is a pent-up desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners are now seeing a return to positive equity as real estate values have increased over the last two years. Many of these homes will be coming to the market in the near future. The choices buyers have will continue to increase. Don’t wait until all this other inventory of homes comes to market before you sell.

3. Home Prices Are Skyrocketing

Daren Blomquist, President of RealtyTrac, recently shared insights into why “2015 is a Great Year to Sell” by saying:

“So far in 2015, [sellers] are realizing the biggest gains in home price appreciation since 2007. In June, sellers sold for above estimated market value on average for the first time in nearly two years.”

One major factor driving prices up is the lack of inventory available for the amount of buyers in the market. Often buyers, who find a home that they would like to make an offer on, are met with the reality that they aren’t the only ones interested.

4. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by over 19.4% from now to 2019. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30-year housing expense with an interest rate near 4% right now. Rates are projected to increase by a full percentage point over the next year according to Freddie Mac.

5. It’s Time to Move On with Your Life

Look at the reason you decided to sell in the first place and determine whether it is worth waiting. Is money more important than being with family? Is money more important than your health? Is money more important than having the freedom to go on with your life the way you think you should? Only you know the answers to the questions above. You have the power to take back control of the situation by putting your home on the market. Perhaps, the time has come for you and your family to move on and start living the life you desire.

That is what is truly important.

Did you see the Seattle Times this week about the huge jump in sales prices in our area?

Last week, 200 Windermere Agents met to discuss the economy and exactly what is the driving force behind this frenzy of buyers. Its was hard not to notice the 24 cranes on that particular day, let along the increased traffic – just to note a few indicators. With neighbors like Facebook, Apple, Google, Amazon and now Expedia (and possibly Alibaba), we are indeed a booming city! Matthew Gardner of Gardner Economics in Seattle shared his perspective of where we’ve been, where we are now, and where we’re going – here in Seattle. Gardner Economics Forecast 4.2.15.